Expansion of Piped Water and Sewer Networks: The Effects of Regulation

This paper investigates strategies to expand piped water and sewer through private providers. Using billing data from a major provider in Brazil and a structural model of consumer sanitation demand and service expansion, we assess the viability of connection targets and the welfare effects of connection subsidies and price incentives. We find that universal connection targets are largely unfeasible due to low sewer take-up. Combining connection subsidies with higher sewer prices boosts expansion and adoption but requires government funding. Charging consumers upon sewer availability is self-sustaining and promotes adoption and expansion, but it shifts costs to households.